Pipeline ROW is forever

The closest thing to eternal life we may ever know is a pipeline right of way.

In 1886 the Standard Oil Co organized the Buckeye Pipeline Co to move it's products out of western OH. Many of the ROW are still in existence in OH, PA and NY. They are still used till this day, that's 127 years.

So when you are negotiating a pipeline ROW take your time, be very thorough you will be living with it for the rest of your life. Not only will you live with it, your children, grand children even great grand children will be affected by the decisions you make today.

In posts to other threads about this subject, people have warned that if you don't cooperate with the company they will go around you. If the company goes around you then you will miss out on the financial rewards. This may be true, but we have seen the results of this type of thinking here in the Marcellus and Utica plays. Many land owners rushed to sign leases to receive the bonus money without a thought for the language of those leases, and about the affect to their property. We see their stories regularly here on GMS.

We should all learn from our mistakes, and the mistakes of others. Take your time and be very thorough, if you can't get comfortable with the terms of the agreement then pass. Otherwise we, will be hearing from you in the future and how your bad decision has hurt you and your property.

Mark

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Permalink Reply by Greg Smith on March 12, 2013 at 4:30pm

Pap, curious here about the numbers you mentioned in the EF...have you heard what Hunt Oil is paying, by chance? Last summer, it was WAY LESS than your numbers now; maybe it's changed. (friend was affected and gave me his info)

Permalink Reply by Michael Allen on March 13, 2013 at 2:59am

Greg-

I don't know what Hunt is paying; again it could be all over the board for gathering system pipelines due to folks wanting pipelines to take their production to market where they make alot more money. Also a T-4 common carrier pipeline is usually longer in distance and has less opportunity to make changes in the routing once it is placed on a map. By the rod, I have seen anywhere from $300-750/rod in Frio, McMullen and Live Oak counties.

Permalink Reply by Greg Smith on March 13, 2013 at 3:22pm

Are different prices paid for the different lines? By the foot or by the rod? If anyone can contribute a li'l education regarding lines (flow line, gathering line, trunk line, etc.)...much appreciated, in advance.

Permalink Reply by Ted Croft on March 13, 2013 at 3:34pm

A real helpful link for me on the ins and outs of sticky points to look for and what to negotiate for in a ROW agreement. This was from the Eagle Ford Shale area but most items seem germane in a lot of other areas.

http://eaglefordforum.com/profiles/blogs/natural-gas-pipeline-easem...

Permalink Reply by Greg Smith on March 14, 2013 at 2:19am

Fang, Thanks

Permalink Reply by Michael Allen on March 13, 2013 at 4:00pm
There are many of Eric Camps suggestions that are totally BS so be very careful what you believe as truth.
Permalink Reply by Farmer John on March 14, 2013 at 1:20am

Link to Eric Camp's list of Pipeline ROW considerations for Landowners:

http://eaglefordforum.com/profiles/blogs/natural-gas-pipeline-easem...

 

Look like items to consider.  Michael, could you please point out which points are totally BS?  Thanks.

 

 

Permalink Reply by Ted Croft on March 14, 2013 at 2:56am

Farmer John,

In my honest opinion, when I was looking for a comprehensive source of info on the ROW row, I found that there was a huge amount of data on the GMS boards.

However, I also found that it really burned a lot of my time trying to sort through all the 'opinions' both pro and con on GMS. Do not get me wrong, the info shared on GMS is timely and usually spot on unless you get next to a 'true believer' then it is always caveat emptor.

Mr. Camp's compendium comes with an immediate disclaimer at the very beginning of the Blog which tells me that he knows that there will be some discord at his offering. Also it tells me that he does not consider himself the last subject matter expert.

That being said, what I found useful in his write up was that he tried to cover all aspects of the terminology,legal, and layman expectations. He also gave very explicit cautions related to the ultimate need for legal advice for the final decision to ROW or not ROW.

A novice at this ROW info am I. So I found all of this info from Mr. Camp to be a superb introductory course. At least now I know what questions to ask. All in one missive.

I live near the Eagle Ford Shale but do have a land interest in Washington County, Ohio.

Permalink Reply by Michael Allen on March 14, 2013 at 3:25am

I thought I could copy his document and write my comments on each part, but couldn't get it done, so I suggest you print a copy of his document and refer to my comments.

1) Length of the pipeline easement is one thing and width of the permanent pipeline easement is another. The larger the pipe diameter, the more permanent width is needed to maintain the pipe. Up to 16" diameter pipe, a 30' wide easement is suffecient, over that a 50' wide permanent easement is necessary. Over 36" pipe diameter will require a 60' wide easement. Temporary work space for construction should be a seperate, non recorded agreement and should be paid for as a seperate item. Same for any other temporary surface needed for storage, staging, etc and should be for one (1) year from the begining of construction.

2) Restrict facilities to only those needed or required by law or regulation, that takes care of anything the company may be required to construct.

3) OK 36-48" to top of pipe or deeper as required to bore or HDD

Gotta run will finish later.

Permalink Reply by Michael Allen on March 14, 2013 at 8:43am

4) This section is totally off base and here's why:

As an example, if the Texas DOT came to your house and said they were putting a new highway across your property, you know that they will have eminent domain and can take your property even if you don't want the new highway. That is a fee taking. They negotiate and you either sign or they take you to court. The only argument is how much they pay. With a pipeline company that has eminent domain power, the same principle applies, it is a taking of easement. The IRS code allows that an eminent domain taking is not at arms lenght willing seller-willing buyer situation, even if the landowner agrees and does not fight the proposal. The IRS code states that no tax is due unless the property is sold and then the capitol gains tax is discounted by the number of years after the easement is signed and paid for. If you can convince the payor(company) to direct all of your payment to easement, then you should pay no tax. A good way to make sure this happens, and in case the IRS should come knocking, is to request a letter from the company with them stating they have the right of condemnation and also get them to attach a copy of their T-4 from the RR Commission.

All temporary work space, surface rental, crops, off ROW parking, etc., should all be on a seperate Temporary Workspace Agreement and not part of the easement document. This agreement should be for 1 year from the date construction begins and if it goes over, then your re-new with another payment. This should be based on a per/acre payment as it is a rental payment for use of the land. You do not want to add this into the permanent easement as it will cloud the title for most dumb real estate folks. When the company fixes all of your fences, re-seeds the ROW, grades your roads,installs gates and cattle guards, you will find it hard to prove to the IRS that you have been "damaged". Just pay the tax as income.

5) Most 30' permanent easements will need at least 40' of additional temporary work space; 50' will need 50' of TWS; 60' will need upwards of 75-100' of TWS. This is more of a safety factor during construction to keep from having accidents.

6) I always use 24 months from the easement signing date to complete construction. If they fail to construct,have a reconveyance clause where the company must reconvey the easement back to you within 30 days of default.

7) Should be specified in the first paragraph of the easement document.

8) The easement should say "pipeline", singular, unless the company is requestion 2 pipelines, and then it should say 2 pipelines.

9) Main word here is safety

10) True unless damaged by a 3rd party

11) Although the term "double-ditch" is used here frequently, that is not the correct term. Double ditching is used on steep side hills in mountainous country. What should be stated is, " existing topsoil up to 12" in depth shall be removed and piled seperately, then replaced as the last part of construction cleanup".

12) Access roads should be addressed as a seperate agreement, whether it/they are tempory during construction or for permanent access. The access road agreement can spell out specific issues: road width, culverts, grading, gravel, grade, etc. Permanent road access agreements should have a certified plat of the road and should be recorded. Temporary road agreements do not.

13) OK 14) OK 15) OK except for emergencies 16) OK, 17) OK 18) same as #12

19) Landowners do not need to have or want the right to construct anything, including a pond/tank that will affect an existing pipeline. Any type of activity no matter what, should be approved in writing by the pipeline conpany before it starts. This is just plain common sense from a safety situation and liability.

20) OK, but you also need a clause regarding safety issues with other pipelines and who will be responsible in making those decisions. Again, a liability and safety issue.

21) The company has no authority to "grant" anything except for assignments of the easement to another company. Some landowners want an assurance that the new company assigned has the ability to comply with the terms of the easement.

22) Needs to address surface damages off ROW with a penalty clause

23) Abandonment definition should be what the RR Commission agrees

24) Better to abandon in place than have the company remove the pipe. You don't want the results of removal, believe me, plus you get to keep the pipe for some future use. Once it is burried and the ground has healed, leave it there. Also, the hazmat issues should be addressed where the company is eternally responsible regardless of the abandonment or time frame.

25) Regulations say "line of sight" for pipeline markers and also at property boundaries.

26) Use the term pipe removal and replacement wii be the same or smaller diameter

27) This clause is a real hoot. Never seen where it works, too many braggers out there

28) You want a plat that is certified by a registered Texas surveyor showing the defined metes and bounds (bearing and distance) of the centerline. You do not want the pipe as the centerline, nor do you want a legal description of the outside boundaries of the easement. You want the plat to read" 25 feet on either side of the centerline description", or whatever the center of the easement width is.

29) OK

30) OK but not needed

31) Permanent roads should have a seperate agreement as previously discussed

32) Need a clause to only allow for 1,000' of ditch to be open at any one time, plugs at night and weekends every 300' and at any road, water or trail crossings, All plus must be sloped to allow for livestock or wildlife to escape.

33) Landowners and lawyers should not be dictating operating pressures of pipelines. This is regulated by the RR Commission or FERC. Keep out of that subject or liability and safety can get you in trouble.

34) Maintenance clause should be "as needed or conducted" by the company. They fly or drive the ROW at least 2 times a year, so if the ROW needs to be bush hogged, they will. If you see erosion control issues, then contact the company and followup with a written complaint.

35) Add a "co-insured" clause if you want, but in reality, if the company has any issues of liability, they are going to be responsible, regardless.

36) OK but not necessary if assigned to another company

37) Not true; the company is always responsible if anything fails unless they can prove the landowner or a 3rd party is negligent or responsible.

38) You can argue for attorney fees, but you are better off to add aditional money to the easement and pay the attorney seperately. The company will add it to that alot more easliy than paying seperate for your attorney.

Finally-

If you do decide to go to court on a condemnation case, remember a few things. Even though your county committe will probably throw the appraisal out, and award you a monster sum, the company will get to use their bare-bones document with noe of the above clauses inserted. They can also condemn for any roads oand temporary work space they need to construct with no special clauses to protect you.

Another issues hunting restrictions, and I think I covered this subject somewhere else, but my suggestion is to get paid for the company to construct during hunting season and let them construct. The faster they are in and out of your property, the better. Plus, you can still hunt. My experience is that the construction doesn't bother the game animals at all, just a safety issue with the construction crews, so move to another location on your property.

Do not record or have the company record your final easement document. Instead, have your attorney or theirs draft a "Memorandum of Easement" that simpley states you and the company have an easement as described on the attached certified plats. You don't want the public at large knowing all of the details of your easement, just the fact that an easement does exist across your property.

Another item not really addressed was block valves and meter sites. These should also be a seperate recorded agreement wit it's own document and certified plat. The plat should also include the site foot-print and any other fencing, gates, SCADA equipment, etc. In addition, some sites require a seperate electrical connection which in turn will need it's own above ground power easement, usually the document is from the local electric co-op but the pipeline company landman will acquire it.

Hope all this helps you all. The more you understand the issues, the better it is for all concerned.

 

 

Permalink Reply by Ted Croft on March 14, 2013 at 9:09am

Thanks Mike, for taking the time to more concisely address the issues the average common guy would not have even known to wonder about. That's what makes GMS a living referendum.

Ted

Permalink Reply by Farmer John on March 15, 2013 at 2:12am

Yes. Thank you for taking your time and offering your expertise. Should prove helpful as Landowners enter ROW negotiations. 

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